Departing Finance chief ‘awash with hope’ for economy under Duterte
Outgoing Finance Secretary Cesar Purisima on Friday expressed his support for the incoming administration’s fiscal policies, stressing that the work of the Aquino Administration has left the Philippines with ample room to accommodate broader policy maneuvers.
With news of the next administration intending to double down on spending, raise the deficit ceiling, and borrow more, Purisima extended his support, convinced that enough confidence and fiscal space has been developed during the Aquino term for the next government to adopt a more expansionary fiscal policy stance.
In a statement, he pointed out that the Philippines has largely freed itself from structural and fiscal constraints, allowing the next administration to increase productive investments in infrastructure and social services over the medium-term horizon.
The past six years has built the right foundations, setting the stage for wider policy options to sustain growth, he said.
“For instance, the country has increased both national government revenues, and specifically tax revenues by at least two-thirds from pre-2010 levels—raising the education budget by 125 percent, health by 336 percent, infrastructure by 360 percent, which is now matched with 5 percent of our GDP, and social services by 166 percent–in what has become a period of unprecedented investment in the Filipino people,” Purisima stated.
If the current growth trajectory is maintained, growth-inducing expenditures will have more and more room to comfortably expand, he said.
The outgoing Finance chief said a holistic tax reform effort could further spur long-term, equitable, and inclusive growth without sacrificing the country’s macroeconomic position.
He cautioned, however, that the measure should be revenue-positive and help to push the tax collection effort to 16 percent of gross domestic product (GDP).
With the country hailed as the most upgraded investment-grade sovereign, the next administration is likewise in a position to tap the markets to finance growth requirements if needed, he said.
“With a record debt-to-GDP level of 44.8 percent in 2015 and low weighted average interest rates (WAIR), the Philippines has reasonable room to maneuver,” he said.
Purisima expressed confidence that the incoming Duterte economic team—namely Finance Secretary-designate Carlos Dominguez, and incoming Department of Budget and Management chief Benjamin Diokno—has the experience and expertise to navigate a fiscally sustainable path in today’s economic environment.
“Awash with hope, the Philippines enters its best period yet,” he concluded.